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06 Jul 2021

What makes a good property investment city?

In order to make a successful property investment, buyers need to be aware of what makes a good investment city. The market is constantly changing, so it’s important to know how you can identify a good investment city so you can guarantee a safe, and secure long-term investment.

Successful property investors are those who recognise trends that allow them to enter a market early, long before others do. There are several indicating factors that a region would have strong capital growth. The earlier you buy in the area, the more growth your property will experience.

Improved transport links

Young professionals make up a significant percentage of the renter demographic. As transport links continue to go from strength to strength across the UK, cities with great transport links provide new job opportunities for tenants. Therefore, areas that are either undergoing transport regeneration or commuter towns that provide strong links to city centres, are great investment cities.

The much-anticipated High Speed 2 (HS2) network is among one of the many travel improvements we can expect to see across the UK. This new railway will link London, Birmingham, Manchester, and Leeds. It will make journey time faster than ever before. The HS2 has the potential to create thousands of new jobs. It will also be a catalyst for economic growth and help rebalance the economy between the North and South. Thus, drawing tenants into the area and providing ample investment opportunities.

Commuter towns

Commuter towns are also becoming ideal areas for renters to enjoy a blend of rural and city life. Post-pandemic trends have shown us that the increase in ‘hybrid-working’ means tenants have less desire to live in the city centre. Therefore, areas with strong transport links to city centres are indicators of a good investment city.

For example, London living has previously been a necessity for those who worked in the capital. However, with homeworking becoming more popular, central living is no longer prioritised. As a result, hotspots along the commuter belt, such as areas in the South-East, and Yorkshire and the Humberside, have seen double-digit growth in rental prices. With the introduction of the HS2, travelling to and from London will be easier than ever before, especially for northern cities such as Leeds and Manchester.

Regeneration projects

Regeneration projects also go hand-in-hand with property investment. The schemesMeadowhall Regeneration typically aim to transform the area, making them more attractive to investors and businesses. As an investor, you should look out for areas undergoing significant regeneration. Cities that have regeneration projects in the pipeline have the potential for strong capital growth. Regeneration can draw new businesses into the area. In turn, this will bring in more residents and increase rental demand.

Sheffield is an example of a city that will benefit from significant regeneration. £1.5bn worth of regeneration will be spent across two decades to revamp the city. The projects are expected to create around 7000 new jobs. Consequently, boosting the local economy and employment rates. Sheffield is a great example of a good investment city. As a result of the regeneration projects, the already thriving property market is set to accelerate. Rental demand will increase, and properties will achieve significant capital growth.

Universities

You can also spot a good investment city if there are prominent universities in the area. Universities bring in extensive numbers of students, who make up the majority of the buy-to-let market. Therefore, demand will always be high in cities that contain high student populations.

Manchester, for example, is home to over 40,000 students and two prestigious universities. Manchester is a prime investment opportunity, as a high number of students also provide a skilled workforce. Students will bring desirable skills into the growing job market, which will have a positive effect on the economy. Especially as Manchester has such a high retention of students too. As a result, the city becomes an attractive option for businesses to relocate to. This will drive up rental demand, making the city a great investment opportunity.

Businesses relocating to the area

A great indication of a cities investment potential is the number of businesses relocating there. Businesses bring opportunities for residents and increase employment rates, which is attractive to investors.

Employment opportunities are undoubtedly one of the most crucial factors tenants consider when choosing a place to live, and they are often at the heart of a growing city. Businesses will want to relocate to places with excellent transportation links and areas with a pool of highly skilled workers.

CityRise Verdict

A combination of all these factors will provide an ideal investment opportunity. Crucially, if you manage to spot these trends in growing cities, you will be able to enter the market before it becomes crowded. This will ensure you get the best possible ROI. Currently, the best investment cities are:

  • Manchester: Thanks to its two, prestigious universities and infamous Media City, Manchester is definitely a prime investment city.
  • Sheffield: With significant regeneration in the pipeline, Sheffield is on track to achieve strong capital growth. You will also be able to get a much more affordable property in Sheffield that will increase in price over time.
  • Leeds: Leeds is another prime student city. It is also the second-fastest growing city in the UK, making it a fantastic investment choice.

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